On January 26, 2022 the U.S. Securities and Exchange Commission (“SEC”) adopted proposed amendments to Form PF that would dramatically expand both the frequency and amount of reporting by private fund advisers and hedge fund advisers (the “Proposal”). The Proposal is purportedly intended as part of an effort to bolster the Financial Stability Oversight Counsel’s
Cybersecurity and data privacy continue to be among the most significant legal risks that businesses face today.
Last year brought a series of high-profile cyberattacks on major companies and U.S. infrastructure targets, continuing the trend seen in recent years. Regulators also brought a number of cybersecurity enforcement actions and announced new rules, guidance, and initiatives on ransomware and other cyber-related issues. In addition, after many years of debate, Congress made some progress in crafting legislation that would require certain companies to report significant cyberattacks and ransomware payments to the U.S. federal government. Companies should expect the demands of cybersecurity risk management and oversight to intensify as we enter 2022.
Continue Reading 2021 Cybersecurity and Privacy Developments in the United States
On January 14, 2022, the United States District Court for the Northern District of California issued a decision in SEC v. Matthew Panuwat validating the legal theory advanced by the Commission that trading in the securities of a competitor company could form the basis of an insider trading violation where the defendant learned that an acquisition of his employer was imminent. In denying the defendant’s motion to dismiss the complaint, the court ruled that the SEC had sufficiently pled a claim, marking the first judicial decision concerning alleged insider trading in securities of a company based on material, nonpublic information (“MNPI”) about another company, a practice that has sometimes been referred to as “shadow trading.” The court’s refusal to dismiss the SEC’s novel legal theory that trading on the basis of MNPI of one company to profit on a securities transaction involving a competitor constitutes actionable insider trading should be considered by companies and individuals as they assess trading decisions and policies.
Continue Reading SEC’s “Shadow Trading” Insider Trading Case Allowed to Proceed
The path was paved in 2021 for unprecedented tax developments in the coming years for large businesses, especially for multinationals and investment businesses operating across borders.
Continue Reading Taxes: Stepping up Enforcement and Ending the Global “Race to the Bottom”
On December 6, 2021, the Biden Administration issued the “United States Strategy on Countering Corruption”. It is the U.S. government’s first-ever comprehensive anti-corruption plan, and “marks a new chapter” in the country’s efforts to curb graft. If the Administration is successful in executing it, the Strategy may spur a significant increase in anti-corruption investigations and…
On October 28, 2021, Deputy Attorney General Lisa O. Monaco announced the administration’s first significant changes to the DOJ’s policies on corporate criminal enforcement, highlighting departures from Trump-era policies. The announcement focused on three corporate enforcement policy developments:
- Individuals and Corporate Misconduct: to be eligible for cooperation credit, companies must provide the DOJ with all
On September 2 and 3, 2021, the Securities and Exchange Commission (“SEC”) announced settlements with Pareteum Corporation (“Pareteum”) and Kraft Heinz Co. (“KHC”) for accounting fraud following years of alleged accounting improprieties and financial restatements at both companies. The underlying facts differed in significant ways, including with respect to the alleged involvement of senior executives, but both companies apparently received cooperation credit for their prompt and proactive remediation and cooperation with the SEC Division of Enforcement’s investigations. The messaging in relation to the announcement of these cases and their timing, coming in the early days of new Enforcement Director Gurbir Grewal’s tenure, is instructive. We expect the SEC to continue to focus on accounting fraud and to credit companies who provide cooperation in these challenging and resource-intensive investigations. To see a meaningful increase in the frequency and nature of cooperation, the SEC would be well-served to provide even more explicit guidance on how cooperation results in improved settlement terms. That said, these recent settlements are helpful in understanding the benefits of cooperation at this time.
Continue Reading Two Recent Settlements Highlight Heightened SEC Focus on Accounting Fraud and Potential Benefits of Cooperation
On July 13, 2021, the Securities and Exchange Commission (“SEC”) announced a major enforcement action related to a proposed merger between a special purpose acquisition company (“SPAC”) and a privately held target company (“Target”). This followed numerous warnings by the SEC staff over several months of enhanced scrutiny of such transactions under the federal securities laws. The respondents, except for the Target’s CEO, settled the action by collectively agreeing to civil penalties of approximately $8 million and to certain equitable relief described below.  …
Continue Reading SEC Brings SPAC Enforcement Action and Signals More to Come
On May 6, 2021, the United States Government Accountability Office (“GAO”)—an independent, non-partisan congressional watchdog organization—published a report summarizing its study on the impact of the Consumer Financial Protection Bureau’s (“CFPB” or the “Bureau”) reorganization of its fair lending enforcement and supervisory activities. In 2018, the Trump administration-led CFPB decided to relocate the Office of Fair Lending and Equal Opportunity (the “Office of Fair Lending”) from the Supervision, Enforcement, and Fair Lending Division (“SEFL”) to the Office of Equal Opportunity and Fairness (“OEOF”), a division within the Office of the CFPB Director that plays no role in enforcement. GAO found shortcomings in the reorganization process and highlighted that the reorganization likely led to a decrease in fair lending enforcement activity in 2018. GAO ultimately recommended that the Bureau analyze the effects of the reorganization on its enforcement and supervision of fair lending laws, develop performance goals, and take measures to assess its fair lending activities going forward.
While not binding on the CFPB, GAO’s report is significant as it comes at a time when the current administration has signaled that it is motivated to increase enforcement of fair lending laws. Acting CFPB Director Dave Uejio has committed the Bureau to implementing GAO’s recommendations, and Biden’s CFPB Director nominee Rohit Chopra has similarly expressed that he would focus on fair lending. Likewise, progressive advocates are using the report as an opportunity to apply increased pressure on the Biden administration to become more active in this area.
Continue Reading GAO Recommends CFPB Evaluate Trump Era Fair Lending Reorganization
The Colombian Corporations Commission (La Superintendencia de Sociedades) (“Superintendencia”) has issued Resolution 100-006261, which requires the overwhelming majority of companies that are supervised by the Superintendencia and engage in international transactions to adopt and implement a compliance program – called a Business Transparency and Ethics program – by April 30, 2021. The program must be designed to prevent and detect violations of anti-bribery laws, in accordance with 2016 guidance.
Continue Reading Colombian Corporate Regulatory Authority Expands Application of Compliance and Transparency Program Guidelines